Kenosha Chrysler plant may be razed

Taxpayers would pick up cleanup costs; city would seek redevelopment

An abandoned Chrysler engine factory in Kenosha, a sprawling complex covering 106 acres, could be razed and its site cleaned up for development under an agreement between city, state and federal officials.

Taxpayers would be stuck with millions of dollars in environmental remediation costs, but if the plan goes as expected, the City of Kenosha would own the site that someday could be used for residential or commercial purposes.

The site is about six miles east of I-94 in an old residential neighborhood that's a mile from Lake Michigan. Some of the buildings are only about 10 years old, while others are more than a century in age, remnants of what was once a bicycle manufacturing plant that morphed into Nash, Hudson, AMC and Chrysler vehicle production.

Chrysler's engine production was shut down a year ago, leaving the property in the hands of the Old Carco Liquidation Trust that's managed the assets left over from Chrysler's bankruptcy.

Under the agreement, the trust will turn over ownership of the property to Kenosha after millions of dollars in industrial machinery is sold and the buildings are demolished, including a 500,000-square-foot facility that was state of the art only a few years ago.

Federal and state money will pay for an environmental cleanup that could easily cost $15 million and could be much higher depending on what's found on the site.

The property is riddled with pipes, above and below ground, that once carried paint to the factory. Asbestos also may be an issue, along with unknown toxins and contaminated water systems.

Over a century, things were torn down but were not fully removed from the site. And, like an archaeological site from an industrial era, other structures were built on top of them.

"I don't think anybody knows yet how expensive the environmental remediation will be. But the intention is that the city doesn't have to foot the bill," said Cynthia Hirsch, a Wisconsin assistant attorney general.

Old Carco tried, unsuccessfully, to market the site to other industrial users. It will get money from the sale of the machinery and will pay for demolition work, but not the cleanup.

Ten million dollars in federal Troubled Asset Relief Program, or TARP, funds will be available for the cleanup. Federal, state and city officials will administer the funds and oversee the work.

Without the agreement, environmental remediation might never take place.

"Forcing a subsequent owner to clean up this ancient mess would have taken a long time in the courts to work out who the responsible parties are, particularly in the context of a bankruptcy case. So the agreement is a much better result," Hirsch said.

City officials say that they didn't want to inherit the Chrysler site, but that it's better than letting the property remain idle with no plan for its cleanup and future use.

"If anybody is going to have direction and control over the potential redevelopment, we believe the city is the best source," said City Administrator Frank Pacetti.

The city has experience pumping new life into abandoned industrial sites, including a former American Motors Corp. site on the lakefront that's now home to a park, two museums and harbor-side condominiums.

It also redeveloped the former American Brass foundry site, 27 acres left vacant when the foundry was torn down and now home to a school, a grocery store and a bank.

An entire neighborhood could benefit from reuse of the Chrysler engine factory site, although it will never employ thousands of people as it did years ago, according to city officials.

"We came to the conclusion that it would be very difficult to market the site as industrial," Mayor Keith Bosman said. "It's a wide open palette at this point, but I suspect the site will have some kind of mixed use, although we are not even close to going down that road yet."

Planning won't get under way until after the demolition and cleanup are completed.

And some of the cleanup costs could be borne by the city, according to Bosman.

"We will have some skin in the game," he said.

Bankruptcy favors lien holders and giving a company a fresh start, over the public's interest.

It would have been the city's "worst nightmare" to have the Chrysler site stripped of everything valuable with no plan for its future, said Arthur Harrington, a Godfrey & Kahn attorney who represented the city's interests.

Getting five government agencies and a bankruptcy trust to cooperate was like "herding cats," Harrington said.

But the agreement provides significant benefits to the city while also meeting the needs of the bankruptcy trust that won't be stuck with holding costs for keeping the property.

"From my perspective, it was a great resolution," Harrington said.

About Rick Barrett

Rick Barrett covers manufacturing, telecom and agriculture. He has received Best in Business awards from the Society of American Business Editors and Writers and was co-recipient of a Barlett & Steele award for investigative business journalism.